Biogen Idec (BIIB): Successful biotechnology practitioner
Biotechnology firms are judged on the basis of how successful they are at shepherding drug candidates through the clinical trial/regulatory approval process. With several approved formulations and more than twenty products currently in clinical development, there is a Cambridge, Massachusetts outfit that ranks with the best.
Biogen Idec (NASDAQ: BIIB) specializes in drugs for neurological disorders, autoimmune disorders and cancer. Products include multiple sclerosis treatments Avonex and Tysabri; psoriasis drug Fumaderm; cancer radioimmunotherapy Zevalin; and Rituxan, a cancer formulation developed with Genentech (NYSE: DNA). The company was formed in 2003, by the merger of Biogen and Idec Pharmaceuticals.
The firm pleased investors last week, when it affirmed expectations for full year EPS of $2.60-$2.70 and revenues of $3.12-$3.16
billion. Analysts had been looking for $2.68 and $3.13 billion. Management also said it expects to grow revenue by 15% each year from 2007 to 2010 and will increase earnings per share, before charges and expenses, by 20% annually for those years. The news kept BIIB shares cycling through a positive seven-week trading channel. The price is currently at the base of that channel, where oversold Stochastic and MACD technical parameters suggest the potential for a rise back toward the top.
Brokers recommend the issue with six "buys," nineteen "holds" and one "sell." Analysts see a 22 % growth rate through the next year. The BIIB Price to Book ratio (4.05), Price to Free Cash Flow ratio (25.72), EPS Growth rate (32.08%), Operating Margin (26.79%), Net Profit Margin (20.09%) and Net Income per Employee ($155.4k) compare favorably with industry, sector and S&P 500 averages.
Institutions hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 500 Index. Over the past 12 months, it has traded between $42.86 and $67.85. A stop-loss of $55.25 looks good here. Note that the firm is expected to announce Q3 results in late October.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.